Why You Should Buy Life Insurance In Your 20s (Not When You’re Older)

The mid-20s is the age when most Singaporeans start to be financially independent. It is this period when you have minimal savings, and have to start paying for your bills. Given that you’re probably earning an entry-level income and have heavier expenses, would you want to add on an additional expense of life insurance premium to your plate?

Yet, buying life insurance when you’re younger can actually save you money in the long run while giving you the necessary coverage you need.

In this article, we will explore why individuals in their 20s might not want to take on a life insurance, and why that might not be the wisest choice.

Table of Contents:

What Is Life Insurance?

Life insurance is a complicated but important kind of insurance coverage. It mainly consists of two types: Whole Life and Term Life.

Unlike other insurance plans, life insurance pays out only after the covered policyholder passes away. The purpose of life insurance is to reduce any financial hardship that may arise from the lack of income the deceased will not earn any longer, together with any outstanding debts or financial obligations of the deceased that must be repaid.

Life insurance is your safety net for those big “what if” moments. It can be useful even when the death benefit is not triggered, so long as it is used appropriately.

Why Are Youths Not Getting Life Insurance?

Many Singaporeans in their 20s do not have life insurance coverage and do not feel an urgent need to get it. Let us look at the reasons why.

1. Life Insurance is Not Seen as a Priority

To those in their 20s, there is a set of clear priorities when it comes to spending money, and life insurance is not on the list. Big ticket items such as houses and cars, fashion accessories like bags, watches and clothing come on top, and other personal indulgences come on top. You might even find bubble tea on that priority list.

However, as you mature, life insurance becomes increasingly important, especially if you have a family or are in debt. Many do not seem to realise this at an early age and come to regret not purchasing one when they were young.

2. Life Insurance is For Older People

The term ‘life insurance’, or perhaps ‘insurance’ in general, is typically associated with the elderly or older people amongst Singaporeans in their 20s. Many do not feel a need to purchase life insurance as they feel that they are still young and have quite a distance to go before thinking about their mortality due to old age.

The truth is, life insurance is not simply about age. It is an umbrella that protects the people you care about. If you have a family or debt, life insurance is built for you.

3. Life Insurance is Too Complicated

Many feel that life insurance is too complicated, with too many insurers and policies in the market, and a long list of terms and conditions to look through. Learning about the various life insurance policies via surfing the internet is not sufficient to have a comprehensive understanding, and one would seek the help of a financial advisor, which many would prefer to avoid.

Fortunately, here at ValueChampion, our team of professionals has curated a list of life insurance insurers and policies to select the best insurance policies to suit your needs.

Reasons To Get Life Insurance In Your 20s

Here are some reasons why you should get life insurance in your 20s and not when you’re older.

1. Lock-in Better Rates

As health and age are important indicators of the premium payable for life insurance, your premium will be lower, making the policy much more affordable.

Your premiums remain the same for the duration of your policy unless you change the amount of coverage. Purchasing life insurance at a younger age locks in lower premiums and reduces the total amount you’ll spend on life insurance over the course of your lifetime.

2. Protection For The Future

You may not have dependents now, but that could change within a few years. Purchasing life insurance coverage now provides protection in place for the future when your children, spouse or ageing parents rely on your income. Dragging this process could make it more difficult and expensive to get coverage.

Even in your 20s, you may have student loans, credit card debt or even financing a new car. In the case of an unfortunate event, life insurance can protect your parents or loan co-signers from the burden of paying off your debts.

3. Younger, More Vulnerable

Younger individuals, especially at the start of their careers, would have limited savings. However, they probably have the highest number of dependents and liabilities.

These could be parents who are approaching retirement age, younger siblings who need to be educated, or even grandparents with critical ailments. There could also be debts that need to be repaid, or a major forthcoming family event, such as a wedding or the arrival of a new baby.

The probability of a younger person having large savings to tide over any sudden financial emergency caused by their death, disability, or illness, is very low. Therefore, life insurance provides the best solution to protect your family’s financial stability and future.

Recommendations For Life Insurance

Here are some suitable term life and whole life insurance policies for those in their 20s that we have identified.

FWD Direct Purchase Term Life Insurance

Etiqa Direct Purchase Term Life Insurance

Etiqa Direct Purchase Whole Life Insurance

Bottom Line

When money is tight, a term life insurance policy can offer a financial safety net for your family. Should you choose to purchase whole life insurance, owning it over several years will allow the cash-value component of the policy time to grow.

The longer you wait to buy life insurance, the more expensive it will get. In addition, you run the risk of deteriorating health as time goes by, which may make you ineligible for some life insurance at that point in time.

Ultimately, your decision to get life insurance will depend on your personal and family situation, along with your finances and obligations.

Ready to buy life insurance? Check out our roundup of the best life insurance plans in the market today!

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